Lets get ready to rumble!
Thats the message upstart Canadian ATS Aequitas has for one of its competitors, TMX Group, operator of several exchanges and ATS in the Great North.
Aequitas has filed a formal complaint with the Competition Bureau of Canada, requesting a federal investigation into certain anti-competitive practices of the TMX Group. Aequitas believes that the TMX Group is using its dominant market position to maintain control over the pricing of market data in the Canadian capital markets.
According to Aequitas, TMX has remained, in effect, an unfettered monopoly, charging prohibitive prices. The ATS further adds in its formal complaint that as a result of cost, the strong majority of Canadian investors and investment advisors only have access to market data reported by the TSX and TSXV trading venues. This means they miss, on average, 40% of all trading activity happening in Canada.
In the area of market data, we believe the TMX has remained, in effect, an unfettered monopoly, leveraging its market power to charge prohibitive and monopolistic prices, stated Jos Schmitt, President and CEO of Aequitas. Excessive market data fees have left Canadian investment dealers with no choice but to restrict the market data access given to their investment advisors and to their retail clients.
The prohibitive cost of data has negatively impacted Canadian investors and capital-raising companies in several ways, according to Aequitas:
1) Canadian retail investors and investment advisors are only given access to a partial view of what is going on in the public markets. On average, they see less than 60% of all trading activity in Canadian public companies and considerably less of the trading activity for certain types of investment products, such as ETFs. Without access to the whole picture, investors are making less informed investment decisions. As a result, they are at a distinct disadvantage.
2) It has also led to negative perceptions about liquidity and transparency, further impacting investor confidence and interest.
3) Trading information from Canadas publicly listed companies and investment products is not reaching the broadest possible audience, neither domestically nor internationally. This is devastating to the visibility and liquidity required by public companies. It is also devastating to the strength and quality of investment opportunities in Canada.
As a means of combating TMX Group, Aequitas has developed and introduced Aequitas CMV Connect, its own data platform.
CMV Connect will utilize internal data provided by contributing investment dealers to construct a new consolidated market data view: Aequitas CMV ConnectTM. This internal data, known in the industry as private market data, is the order and trade information generated by contributing investment dealers from their activity on the different Canadian marketplaces. Aequitas CMV Connect will not be reliant on the expensive public market data feeds provided by each trading venue, therefore enabling tens of millions of dollars in cost savings for the industry. It will also produce superior quality market data compared to what most investors and investment advisors have access to today. Further details of
The TMX has ensured that investment dealers are captive consumers and captive suppliers of their own private market data, continued Schmitt. Armed with data services agreements that we believe are anti-competitive, we see the TMX claiming ownership of investment dealers private market data, data that should belong to the dealers and their clients. The TMX is clinging to its monopolistic past that has no place in Canadas capital markets in 2015 and is detrimental to Canadian capital markets and economic growth. This has to change.
Aequitas also believes it is important for the industry to challenge the TMX on access to market data and private market data in particular. The lack of consolidated Canadian market data available at a reasonable price impacts all market participants. Its time for the industry to support a commercial solution to challenge the TMX stranglehold on Canadian market data. Its time for the industry to drive meaningful change.
